Weakonomics has covered the problem with education from many different angles. We’ve talked about what we should really be teaching, whether college is worth it, and everything in between. But the analysis continues and even as I try to put the issue to rest, we learn new things. The question of whether college is worth has has long been answered. It is. That’s too simplistic though. The better answer is not all education is created equal, and you have to be smart about it.

Like trying to decide whether to go to the expensive private school or the public one. Popular opinion would say the cheaper public school because you’ll be saddled with less debt upon graduation. But as we like to do here, let’s just go ahead and throw that idea out.

You might think students with the most debt have the highest default rates. But it’s the other way around. There’s a negative correlation between schools that produce students with the most debt and those students’ average default rates. In other words, those who borrow the most default the least:

Using a database of information from colleges all over the country, Morgan Housel over at Motley Fool broke up all the borrowing students make into quintiles. As expected the 1st quintile has the highest debt ($18k) and the 5th quintile has the least ($7k). So of the five quintile which defaulted the least often? The first quintile, or the students with the most debt. It was actually the fourth quintile that had the highest default rate, 18%. With just an average borrowing of $10k it’s far lower than the group with the highest debt load. The article linked above has some great charts breaking down this data. It’s almost startling to see the group with the most debt having the lowest default rate.

The data illustrates my point that not all education is created equal. No it doesn’t mean go to the private school. But it does mean that the debt burden for people that go to good school may not be as bad as we’ve been lead to believe. The problem is that terrible schools have convinced people that they should go to college. And either they graduate with a worthless degree, or more likely, they don’t graduate at all.

50 years ago a college degree really was something. Now the degree has been cheapened, diluted, and oversold. Law schools illustrate this the best. I mean no offense to tier 4 schools, but when I hear someone is an attorney I’m not impressed. It’s easy to get one. Where you get it matters very much. Even worse is the problem of some colleges not doing enough to help their students graduate.

Hopefully over the next few years databases will emerge that make this data more usable for everyone. The database Housel used is housed at the Department of Education and the data is too crude for the casual user. The College Navigator is good enough and should allow anyone with a decent level of data to make decisions between schools easier. For example: if someone is deciding between Georgia Tech or the University of Phoenix Atlanta campus they could compare default rates. That’s 2% vs 26%. Or the retention rates: 95% vs 55%.

So, let’s all make sure we get this set straight again. Not all majors are created equal, not all colleges are created equal, not all degrees are created equal. And the most important factor is the student and what they do with their time.

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